Partners Group: Navigating Volatility with Resilient AuM Growth and Sustainable Dividends

The private markets asset manager Partners Group Holding AG (SIX: PGHN) has emerged as a standout performer in an uncertain macroeconomic environment, as evidenced by its June 30, 2025 AuM announcement released on July 15. With total assets under management (AuM) surging to $174 billion, up from $149 billion a year earlier, the firm has demonstrated organic growth resilience amid geopolitical turbulence and shifting investor sentiment. This momentum, coupled with a CHF 42.00 per share dividend paid in May 2025 and its upcoming September 2 interim results, positions Partners Group as a compelling income-focused investment opportunity.

AuM Growth: A Diversified Engine of Expansion

The $25 billion year-on-year rise in AuM reflects a multi-pronged strategy:
1. Client Commitments: New mandates and fund inflows totaled $12 billion in H1 2025, a 9% increase over H1 2024. The firm's emphasis on evergreen funds (which now account for 48% of inflows) and customized mandates has broadened its revenue streams, shielding it from cyclical fund-raising pressures.
2. Strategic Acquisitions: The $4 billion acquisition of Empira Group in late 2024 bolstered real estate AuM, a sector that now represents 13% of total assets.
3. Foreign Exchange Tailwinds: A $10 billion boost from currency fluctuations, particularly the weakening of the Swiss franc against major currencies, amplified reported AuM growth.

While management fees grew in line with AuM, performance fees were muted in H1 due to delayed asset divestitures. CEO David Layton noted that “tariff-related market volatility in Q2” slowed exits, but stressed that a robust $19 billion exit pipeline for 2025–2027 bodes well for future performance fee realization.

Dividend Sustainability: Yield Stability Amid Headwinds

The CHF 42.00 dividend, paid on May 27, 2025, marked an 8% increase over 2024's payout and underscores Partners Group's commitment to returning capital to shareholders. Despite a 35% Swiss withholding tax, the dividend yield of 2.4% (based on a July 15 share price of CHF 1,750) remains competitive compared to peers like Blackstone (BX) or KKR (NYSE: KKR), which offer yields of 1.8% and 2.1%, respectively.

The firm's distributable cash flow (DCF) remains robust, supported by recurring management fees (which accounted for 76% of H1 revenues) and disciplined expense management. Even with a 9% rise in operating costs to CHF 778 million, the firm's cost-to-AuM ratio improved slightly, reflecting economies of scale.

Strategic Opportunities: Navigating 2025's Crosscurrents

The September 2 interim report will provide deeper insights into Q2's performance, but the H1 narrative already highlights key strengths:
- Sector Diversification: Private equity (48% of AuM) and infrastructure (18%) remain core pillars, while real estate's growth post-Empira adds balance.
- Geographic Momentum: North America now accounts for 33% of fundraising, up from 28% in 2024, reflecting the firm's success in capturing private wealth demand.
- Innovation Pipeline: Investments in sectors like healthcare (e.g., PCI Pharma Services) and energy transition infrastructure (e.g., subsea interconnectors) align with long-term structural trends.

Risks and Considerations

• Performance Fee Volatility: The lag in Q2 divestitures underscores reliance on external market conditions for fee stability.
• Currency Exposure: The CHF's strength could compress non-Swiss revenue streams if not hedged effectively.
• Competition: Rising alternatives to traditional private equity (e.g., liquid alts, SPACs) may test Partners Group's mandate-driven model.

Investment Thesis: A Long-Term Income Play

Partners Group's H1 results confirm its status as a high-conviction income investment, particularly for investors prioritizing:
1. Dividend Certainty: The firm's track record of consistent payout growth, even in volatile markets, suggests the May 2025 dividend is sustainable.
2. Asset Quality: A $174 billion AuM base with a 25–40% performance fee contribution target for 2026–2027 implies upward pressure on earnings.
3. Strategic Execution: The Empira acquisition and focus on evergreen funds signal a shift toward recurring revenue models, reducing reliance on cyclical fund launches.

Conclusion: A Steady Hand in Shifting Markets

Partners Group's Q2 2025 performance reinforces its ability to navigate uncertainty while maintaining growth and income distribution. The firm's diversified AuM base, disciplined capital allocation, and exposure to secular growth sectors position it as a rare blend of income stability and capital appreciation potential. Investors should monitor the September interim report for signs of Q2's performance fee recovery and H2's exit momentum. For those with a 3–5 year horizon, Partners Group remains a compelling play on the private markets' enduring appeal.

Consider partnering with Partners Group for steady returns in a volatile world.